What Does an Unfair Dismissal Claim Cost? Fees & Value in Dispute

What does an unfair dismissal claim cost?

Fear of the cost stops many people from standing up against a dismissal. Yet the costs are fairly predictable, and employment law has some special rules worth knowing. Roughly speaking, the financial outlay consists of three building blocks:

• Lawyer fees under the Lawyer Remuneration Act (RVG),
• Court fees under the Court Fees Act (GKG), but only under certain conditions, and
• Expenses such as postage, copies or travel costs.

All three depend on a single figure: the value in dispute (Streitwert). And employment law has one special feature that outweighs everything else: in the first instance, each side pays its own lawyer, regardless of the outcome. Let's go through this step by step.

The value in dispute: the basis for all costs

The value in dispute is the calculated value of what is being contested, and it determines both lawyer and court fees. For an unfair dismissal claim, the court generally applies a quarter of your annual earnings to the dismissal claim itself, that is, three gross monthly salaries (§ 42 para. 2 GKG). This applies largely regardless of how long you have already worked at the company.

An example: at €4,000 gross per month, the value in dispute is €12,000. If further claims are added, for instance for a qualified reference (Arbeitszeugnis) or continued employment, the value in dispute increases accordingly, and with it the fees.

Lawyer fees under the RVG

Lawyer remuneration is governed by the RVG and rises in tiers with the value in dispute. In a typical unfair dismissal case, it consists of several fee components:

• Procedural fee for conducting the proceedings,
• Hearing fee for attending court hearings,
• Settlement fee, if the case ends in a settlement,
• a flat-rate expenses allowance plus statutory VAT.

As a rough guide: at a value in dispute of around €12,000, lawyer fees per instance are roughly in the low to mid four-figure range, depending on how the proceedings unfold. A settlement adds the settlement fee to the total, but can save on court fees. These are guide values; the exact amount follows from the RVG fee schedule and the specific course of events. Your lawyer will give you a reliable cost estimate in advance.

Court fees: judgment or settlement?

Here is some good news. Whether court fees arise at all, and how much, depends on how the case ends:

• Settlement (the usual outcome): if both sides settle, the court fees are typically reduced to zero. So ending the case through a settlement usually means no court fees at all.
• Contested judgment: if the court decides through a judgment, the court fees are based on the value in dispute. The losing party bears them.

Since most unfair dismissal proceedings already end in a settlement at the conciliation hearing, court fees often play a smaller role in practice than many people fear. You can read how such a settlement comes about under Unfair dismissal claim and Negotiating severance pay.

The § 12a rule: in the first instance, everyone pays their own lawyer

This is the most important, and most surprising, rule in labour court proceedings. Unlike most other court proceedings, the rule here is: in the first instance there is no right to reimbursement of lawyer fees, regardless of who wins (§ 12a para. 1 ArbGG).

In concrete terms, this means: even if you win the case completely, you do not get your lawyer fees back from your employer. And conversely, if you lose, you do not have to cover the other side's lawyer fees either. Each side pays its own lawyer. This rule only applies in the first instance; on appeal, the general reimbursement rules apply.

In practice, this cuts both ways: it limits your risk, because if you lose you do not have to fear the other side's lawyer fees. At the same time, it means you have to budget for your own costs. This is exactly why the cost question is often folded directly into settlement negotiations, for instance through a severance pay amount calculated accordingly.

More important than any cost question: the 3-week deadline

Before you think about costs, think about time. An unfair dismissal claim must reach the labour court within three weeks of receiving the written dismissal (§ 4 KSchG). This deadline is a cut-off period. If it has passed, the dismissal is generally deemed valid, even if it could have been successfully challenged on the merits. At that point, the cost question no longer arises at all.

Calculate your exact deadline to the day: Deadline calculator, how many days do you have left?

How you can protect yourself against the cost risk

Nobody has to give up their rightful claim out of fear of the costs. There are three established ways to cover the cost risk:

1) Legal expenses insurance

If you have employment legal expenses insurance and the contractual waiting period has passed, it usually covers lawyer and court fees, often minus an agreed excess. It is always worth checking your policy before filing a claim. Important: the insured event generally occurs when you receive the dismissal, so a policy taken out afterwards will not help in this case.

2) Legal aid (Prozesskostenhilfe)

If your income is not enough to cover the proceedings, legal aid may be an option. Depending on your financial situation, it covers the costs in whole or in instalments, provided the claim has a reasonable chance of success and is not pursued frivolously. You apply for it at the labour court.

3) Litigation funding through Team Abfindung

The third path is our litigation funding. You pay nothing upfront, we carry the cost risk and work purely on a success basis. Only if you actually receive severance pay in the end do we keep an agreed share of it. If the proceedings come to nothing, you pay nothing. That turns the cost question from an obstacle into a side issue for you.

What you should do now

1. Note the date you received the dismissal. The 3-week deadline runs from that day. It takes priority over everything else.
2. Estimate the value in dispute roughly. Three gross monthly salaries give you the rough order of magnitude for the costs.
3. Check your legal expenses insurance. Look in your policy to see whether you have employment legal cover and whether the waiting period has passed.
4. Sort out funding. Without insurance and with tight finances, check legal aid or litigation funding before the deadline runs out.
5. Get an initial assessment. The severance pay calculator shows you in 2 minutes what order of magnitude of severance pay is realistic, the reference figure against which you can weigh the effort involved.

How can we help you?

Costs are the most common reason people simply accept a dismissal that could have been challenged, and in doing so, often leave severance pay on the table that they could have secured through a settlement. That is exactly the obstacle we remove. We review your case together with lawyers specialising in employment law, file the claim in time to meet the deadline, and negotiate on your behalf.

We carry the risk: purely success-based, with no upfront cost. We fund the proceedings, and only if you actually receive severance pay in the end do we keep an agreed share of it. That way, you do not have to choose between your rights and your bank balance. Start with an initial assessment using our severance pay calculator, it only takes 2 minutes. And keep the 3-week deadline in mind: it runs from the day you receive the dismissal.